Having your businesses books maintained correctly is a cornerstone for building a successful business. A common feature of businesses that fail is many of them had poor bookkeeping and record keeping practices.
There are many reasons why business bookkeeping needs to be of a high standard. Some are blatantly obvious, however most don’t become evident until a problem presents itself and bites you at the worst possible moment.
Motivations for keeping properly maintained books include:
- Tracking business performance – day to day decisions of running a business need to be made from up to date and reliable information. Without this, business owners are making blind decisions.
- Bank or financial institution loans – one of the first things that that a bank or financial institution will ask you for when applying for loans and overdraft is up to date financial statements
- Tracking of amounts payable and receivable – at the click of a button, you can see how much you owe to suppliers or customers owe you.
- Tax planning – errors in bookkeeping can lead to increased tax payable if accountants are not using accurate figures when doing end of year tax planning
- Selling business – just about every business sale requires 3 full years financials as part of the due diligence process. Incorrect bookkeeping can lead to either: a. undervaluation of business for sale, b.overvaluation of business for sale, which sounds like a pretty good thing until the misrepresentation legal letter arrives.
If you have any doubt as to the accuracy of your existing bookkeeping arrangements we can be of assistance